A comparison of the economic concepts of adam smith and karl marx

Marx began his major work on economics, Capital, with a discussion of commodities; Chapter One is called "Commodities". The subjects of labour and instruments of labour together are called the means of production.

In his time and place, these indictments of capitalism may have seemed plausible because working conditions were much different in the newly formed capitalist society of Great Britain in the mids. Kal Marx strongly believed that in any capitalist setting, it was always the rich who benefitted from any production while the poor were exploited.

Money[ edit ] Marx held that metallic money, such as gold, is a commodity, and its value is the labour time necessary to produce it mine it, smelt it, etc. Smith believed that by earning and spending money, the economy would be stimulated and thus grow.

Adam Smith When the Scotsman Adam Smith — was born, industrialization and a profit-driven market system were replacing custom and command-driven economic systems across Europe. Smith contended that production was the key to a growing economy.

Marx believed that the flaws in the system would lead to the eventual breakdown of the wealthiest capitalist countries; thus far, history has proven Marx wrong in that it has only been very poor, economically unstable developing countries that fall to the grips of communism.

In order to exhibit one of the many ills of capitalism, Marx created the theory of surplus value. The rich would get richer and the poor would get poorer. In its crudest form, capitalism works in this way: He believed there existed internal contradictions in the capitalist system that doomed it from the start: Each believed that the number of labor hours put into an object created the value and thus the worth of the object.

Without the production portion, nothing can be consumed. Communism is a classless, stateless society in which the means of production are held in common. He believed that in a free market economy, an individual would be able to earn and spend in a market freely, and it would allow a worker to act as a consumer as well.

This necessary labor is necessarily only a fraction of a full working day - the rest, surplus-labor, would be pocketed by the capitalist as profit. He believed there existed internal contradictions in the capitalist system that doomed it from the start: In order to produce, they enter into definite connections and relations with one another and only within these social connections and relations does their action on nature take place.

This essay intends to study some of their most poignant theories to discover when and why these men diverged in their political philosophy.

Upper Saddle River, NJ: One famous and contested school of thought is Classical Economics. This will lead to the fairest judgment possible and most likely a judgment based on moral sentiment.

These men have together been placed in the school of classical economics, signaling that there are similarities in their ideology.

Smith contended that production was the key to a growing economy.

Throughout the years, philosopher-economists have argued various theories, attempting to find the one that will perpetuate the most efficient and lucrative economy. Modern society is woven together by a complex network of individual choices with local, national, and even global implications.

Because of the natural and logical benefits of capitalism, each person—from the poorest to the richest— has the potential and the capability to better him- or herself in the capitalist economic system.

The worth of a commodity can be conceived of in two different ways, which Marx calls use-value and value. In his mind, everyone, because private property exists, has the chance to own, create, and earn their own living.

He also believed that in the long term this process would necessarily help the capitalist class.

The most important virtue according to Smith is self-command. Historians place the beginning of capitalism some time between about Sombart and some time in the 17th century Hobsbawm. The free market fixes errors on its own.

Karl Marx Karl Marx — was born in the midst of the Industrial Revolution, into a middle-class family in Prussia a former German kingdom straddling parts of present-day Germany and Poland. In doing so, consumers would only pay as much as or less than they would value the benefit derived from a good, and producers would only sell for as much as or higher than they would have spent on producing a good.

One of his notable and more contentious theories — the labor theory of value — claims that the value of a good or service is directly connected to the amount of labor required for its production.Feb 21, · Compare and contrast the economic theories of Adam Smith, David Ricardo, and Karl Marx?

all i need is a few basic points on the compare and contrast on the three people so i can write an essay.

Source(s): compare contrast economic theories adam smith david ricardo karl marx: agronumericus.com: Resolved. Marxian economics, or the Marxian school of economics, refers to a school of economic thought.

Its foundations can be traced back to the critique of classical political economy in the research by Karl Marx and Friedrich Engels.

A Comparison of the Economic Theories of Adam Smith and Karl Marx Words | 9 Pages There is perhaps not a more famous ongoing dialectic argument in the field of political economy than the one between Adam Smith and Karl Marx in regards to capitalism.

In conclusion, while both Adam Smith and Karl Marx agreed on a few core ideas, they differed on the method of production of goods and services and distribution of resources.

Whereas Karl Marx went so far as suggesting revolution by the proletariat against the bourgeoisie for a more just, equitable society, Adam Smith preferred stability and peace over revolution.

VIII: Adam Smith vs. Karl Marx: Similarities and Differences Both Smith and Marx held several similar economic views, but differed drastically with respect to political ideology. Both believed that labor assigns value to objects and they agreed on the importance of consumption as it gives rise to production.